Your fiRm Is Considering Leasing a New Robotic Milling Control

question 12

Multiple Choice

Your firm is considering leasing a new robotic milling control system.The lease lasts for 5 years.The lease calls for 6 payments of £300,000 per year with the first payment occurring at lease inception.
The black box would cost £1,050,000 to buy and would be straight-line depreciated to a zero salvage.
The actual salvage value is zero.The firm can borrow at 8%, and the corporate tax rate is 34%.
What is the after-tax cash flow in years 1 through 5?

• A)£-126,600
• B)£-198,000
• C)£-269,400
• D)£-287,250
• E)None of the above.

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